A SAAD STORY Accounts of a Dispute Between Two Saudi Billionaire Families Have So Far Focused on One Side
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SPECIAL REPort REUTERS/OLIVIA HARRIS A SAAD STORY Accounts of a dispute between two Saudi billionaire families have so far focused on one side. New evidence suggests a different story BY DOUWE MIEDEMA, SHURNA ROBBINS biggest banks billions of dollars and is now During an interview with Reuters, five AND SARAH WHITE being slugged out in courts from London to advisers -- two accountants, two PR advisers LONDON/GEORGE TOWN, JUNE 10 the Cayman Islands. and a lawyer -- dominate, interrupting when Some family members face travel bans he tries answering a question. ohammed Algosaibi often turns the linked to the case so it has fallen to the 32- The missing money, he says, was taken palms of his hands up as he talks, as if year old to defend the Algosaibi empire since by his uncle Maan al-Sanea, who married askingM for understanding. the 2009 collapse of two Bahraini banks left into the Algosaibi family 30 years ago and He is trying to explain one of the biggest more than 100 banks including Deutsche was put in charge of its financial businesses. but least reported failures of the financial Bank, HSBC and Societe Generale owed an Al-Sanea used his insider’s access, Algosaibi crisis. This has split his family, one of Saudi estimated $22 billion. and his advisers say, to siphon off billions of Arabia’s richest, cost some of the world’s Small wonder he appears uncomfortable. dollars through a money-laundering maze. JUNE 2010 A SAUDI FEUD JUNE 2010 “I WANTED TO WORK IN THE MIDDLE EAST. WHO’S WHO I WANTED TO HAVE SOME ADVENTURES.” ALGOSAIBI FAMILY Wealthy trading family from eastern As a result the Algosaibis, who say they western banks -- although investors do have Saudi Arabia. Led for years by Abdulaziz have been left some $9.2 billion worse off short memories.” and then Suleyman, both now dead. through unauthorised borrowing, are suing Remaining family allege that son-in- al-Sanea in the Cayman Islands for fraud, MONEY EXCHANGE law Maan al-Sanea duped them out of forgery, and masterminding a massive Ponzi FAMILY AND BUSINESS have been inter- billions. They say they didn’t know what scheme following the collapse of the Bahraini twined in the Gulf for generations, a situation al-Sanea was doing until it was too late. lenders, one of which was owned by the family epitomised by the Algosaibis. The roots of their and the other by al-Sanea. wealth lie in a conglomerate of export and MAAN AL-SANEA Accounts of the case so far have focused on import and trading businesses, as well as land. Married Abdulaziz’s daughter Sana in the Algosaibi version of events. Al-Sanea has Based in the east of the country, the family 1980. Managed Algosaibi family finance always categorically denied these allegations, built construction firms and later won the businesses for almost three decades. and declined to comment for this story. concession to run the Pepsi-Cola bottling plant. Wealthy in his own right with holdings But new evidence presented by five banks Some 60 years ago they also started in the Caymans. suing the Algosaibi family company in a financial businesses, though on a modest separate case at the High Court in London scale. The Money Exchange served expatriate SALAH AYOUTI -- published here for the first time -- raises workers in the nascent oil industry around oil Algosaibi family accountant who, doubts about the family’s claim that it did not company Aramco with cash remittance and according to documents in a London know what al-Sanea was doing. currency exchange services. court case, raised questions about al- Banks have compiled a mountain of emails, When al-Sanea married Sana Algosaibi, Sanea years before the collapse of the resolutions and what look like transcripts of one of patriarch Abdulaziz’s five daughters, two banks at the centre of the case. telephone conversations for their suit, which in 1980, he was made a partner in the Money centres around deals they struck with units Exchange and took control of the Algosaibi GLENN STEWART in the family partnership Ahmad Hamad financial businesses. American who was hired by al-Sanea Algosaibi & Brothers (AHAB). The documents Saud Algosaibi, Abdulaziz’s only son, and helped run parts of the Algosaibi show that the Algosaibi’s own accountant had resented the fact Sana’s husband rose to power. family business. Now being sued by the been sounding alarm bells about al-Sanea In a sign of how deep the rift has since become, Algosaibis for his role in the collapse of and his business methods for years. Saud’s sister refers to him in her affidavit for the the banks. Says the foreign banks who “I am really disturbed from your careless Cayman court as somebody with a “general did business with al-Sanea knew what and unprofessional position in dealing with tendency to avoid any responsibility”. they were getting into. this situation,” accountant Salah Ayouti told patriarch Abdulaziz Algosaibi, the second of DEBT CONCERNS TONY JAMES the partnership’s three founding brothers, in a HIS BROTHER-IN-LAW wasn’t the only Ran al-Sanea’s bank in Bahrain. One letter about al-Sanea sent in May 1994. one unhappy about al-Sanea. Ayouti, the of a number foreigners detained in I am “hoping that it will not turn a disaster accountant, expressed worries about him on that country because of his role in the if you will keep behaving in careless way rather various occasions and was concerned that collapse. Released just before Christmas. than dealing with it strongly and seriously.” his debts could hurt AHAB, whose financial The documents show that al-Sanea built business was centered around the Money played an active role, and seemed to keep his empire with the full knowledge of his wife’s Exchange. “To date, no decision has been tabs on al-Sanea and his plans. Saud met family and is now being made a scapegoat reached as to who will settle that indebtedness,” bankers, dealt with the family’s financial for schemes his in-laws knew existed -- and he said in a 2000 auditors’ report. businesses, and was in frequent conversation realised were flawed -- all along, the banks say. As early as 1997, the accountant wrote that with al-Sanea. This new evidence and the countless the Money Exchange suffered a “permanent” Saud could be demanding. “Tried to reach legal cases shine a rare light on the practice liquidity shortage -- so much so that it needed you several times last month and this month,” of “name lending” in the Gulf Arab region, in to borrow not just to meet the needs of “the he wrote to Al-Sanea in 2005, according which a person’s name is sufficient collateral partners and their affiliated companies”, but to a court submission. “I understand where to win a loan or a business deal. also to service existing debt. you come from, however think the analysis “It’s something that happened in a lot Three years later, Abdulaziz stepped in to missed several points ... would like to suggest of emerging market countries. It tends to be reassure the accountant -- and creditors who meeting with someone from Money Exchange because of government relations or ties with may have been worried about the Exchange. to discuss a workable plan and come up with powerful, rich figures,” said Andrew Andrijanovs “In his capacity as Chairman and a partner of a scenario.” at investment banking boutique Exotix. AHAB”, Abdulaziz backed “the entire debts Page after page of such exchanges is “One person’s connections or their status of Maan Al Sanea and his companies”, says a proof, the banks argue, that the Algosaibis in society did lead to large sums being March 2000 document described as a “pledge”. knew what was going on and are therefore lent, sometimes without the proper risk The court documents in the London case responsible for setting things right. management. That has been a big lesson for also show that Abdulaziz’s only son Saud AHAB said it would not comment on 2 A SAUDI FEUD JUNE 2010 statements made in the London court so far, repeating that “the notion that they knew or cooperated in the looting of their business has no logical or legal basis”. THE GOOD LIFE DESPITE THE FAMILY concerns, Al-Sanea clearly enjoyed the fruits of running an important part of the business, basing many of his companies in the Cayman Islands, where he held much of his wealth. Al-Sanea had a private plane fitted with plush white carpet, a master bedroom hung with expensive artwork, and a bathroom with gold fixtures, says Ninfa Arellano-Smith, a Cayman Islands banker working for HSBC. She met al-Sanea in 2006 through her husband -- the director for the Civil Aviation Authority -- and started working for him. Al-Sanea, an elegant dresser, has a down- to-earth and easy sense of humour, while his wife Sana dressed like a typical western woman on a beach holiday in the Caymans, Arellano-Smith recalls. “Sana is a very caring lady and soft spoken, REUTERS/RALPH ORLOWSKI but you know she still runs things. It’s how they interact between them: she will pat him Then came the 9/11 attacks on the United While Stewart ultimately reported directly on the arm in a joking manner or something. States in 2001. America clamped down to Al-Sanea, the working relationship between They are a very caring, strong couple.” on money exchanges in Saudi Arabia -- the two men -- based at different ends of the The al-Saneas took up an entire floor at the unregulated businesses it feared could be bridge that connects Bahrain to Saudi Arabia luxurious Ritz-Carlton resort on their 2008 used as a source of funding for terrorist groups.